Following the latest budget, the Government has outlined its planned modifications to the stamp duty system. Properties sold for more than £2m will now be subject to a charge of 7% of the purchase price. This will represent an extension to the current stamp duty thresholds, where residential properties over £1m are liable for 5% stamp duty. In addition to this, those buying properties for over £2m via a company will now pay 15%.

The Chancellor, Mr Osborne, said that those who bought at the top end of the market should contribute more: “It is fair when money is tight, and so many families could do with help, that those buying the most expensive homes contribute more.” The move is predicted to generate an additional £150m for the treasury in the next financial year – rising to £300m by 2016-17.

The change will only affect a small number of house buyers; Land Registry figures for November 2011 show that there were only 121 homes sold for more than £2m in England and Wales. That is just 0.2% of the total 57,967 houses sold that month, and of those 121, 98 were in London.

In addition to this new extra tier of high-level of stamp duty, the chancellor is clearly keen to close some loopholes. One popular way of stamp duty avoidance was to set up a limited company to buy the property, which immediately sold it back to the individual, or which pushed the price up when selling on to the next buyer – done by the owner selling shares in the company, rather than the property itself. From now on, those buying properties for over £2m via a company will now pay 15% stamp duty.

Also, overseas companies that already own UK residential property worth more than £2m will be subject to capital gains tax from April 2013. A somewhat controversial move for the chancellor, as it could well make the UK less attractive to foreign investors.